Fixed Income Analysis /

Venezuela: As negotiations resume, we reaffirm our preference for PDVSA bonds

  • Formal dialogues finally resume, helped by the growing influence of Petro

  • A flexibilisation of Chevron’s license looks imminent, in the context of limited political concessions from Maduro

  • Price convergence of PDVSA to Sovereign bonds could accelerate after trade sanctions are eased

Ramiro Blazquez
Ramiro Blazquez

Head of Research and Strategy

25 November 2022
Published byBancTrust

Norway officially announced on Thursday, through social media, the resumption of the dialogue process between the government of Maduro and the main opposition parties this 26 November. The day before the announcement, Gustavo Petro indirectly confirmed the rumours circulated by news agencies, a non-trivial and positive signal on the role to be played by the Colombian President in this new phase of the talks. The official message by Norway mentioned that “a partial agreement on social matters” would be signed at the time of resuming talks. This arrangement is expected to unlock between USD2.7bn and USD3.0bn in Venezuelan funds abroad to use it for domestic infrastructure and social spending. President Maduro accepted the condition that the United Nations oversees the use of the resources, foreseeing the need to significantly improve the socio-economic situation ahead of the 2024 presidential election.

It is also expected that the US administration will lift restrictions on Chevron, so as to allow it to increase oil output and exports to get paid for pending debts by PDVSA. In order to obtain this relief from OFAC, we expect Chavismo to make some political concessions as we approach the 2024 electoral process. Our baseline remains that of a moderate overhaul of political rights, which would hold back any further abatement of sanctions, particularly on financial transactions. While we only look to a material rebound of Venezuelan bonds as we get closer to the election – and provided that the perception of clean elections becomes more entrenched – we think that the convergence of PDVSA notes to the Sovereign could accelerate after trade sanctions are softened.